Fixed Income Recap:

            High yield firm yesterday on no volumes. The high yield calendar is close to shut down til labor day as well.  Late day equity fade did not affect high yield at all, really because of the lack of anything trading.  Basis trading has been a bit more active in telecom, building products, homebuilders and some industrials with basis transacting in the +140-+190 areas for the most part.  There is a $37 bil 2 yr auction today which has much attention in addition to heavy discussion on Fed policy/rates on front page.  S&P opening -8.10 futures, high yield index weaker about 3/8.     

Fixed Income Most Recent Axes:

HEIGR 6.125 16, THC 8%, WCC 7.5, DHI 2011, LEN, VWRINT, HAWKER, Capell, IRM, MTH, OC, PZZ

Herbst, MGM Studios, Great Canadian, Marsico

Treasury Rates Commentary

• The Treasury market opened up the New York session off its overnight levels led down by the long end with the pending $7Bln 30 year TIPS auction this afternoon. Treasuries quickly found their lows in the midmorning bouncing off these levels on short covering, real money buying in the intermediate sectors and equities unable to keep their overnight/early gains. The UST market remained quiet ahead of today's $7Bln 30 year TIPS auction with mixed views leading in. Participants attempted to cheapen the issue up throughout the morning but to little avail as it came near the highs of  the day at 1.768% through by 1.2bps, 38.9% allotted to indirect bidders 2.78 bid to cover. 30 year breakevens were out 2.9bps on the day (in roughly 2.5bps prior to the auction).
• The quiet summer feel was in full force throughout the afternoon session with the market trading range bound into the close. At 3PM benchmark Treasuries finished mixed with the 5 year the best performer and the 30 year the worst.
• The calendar is quite busy for the remainder of the week with $112Bln of supply over the next three days in 2s, 5s, 7s, two Fed purchases, the anticipated weekly jobless claims on Thursday after last weeks 500K reading and finally on Friday GDP and Bernanke's speech in Jackson Hole.